Trade Analytics

Industrial Development & Economic Growth in Punjab

Latest update: December, 2019

Economic Snapshot
Per capita Income


December, 2019

Punjab, one of the northernmost states of India, is bordered by the Pakistani province of Punjab to its west, Jammu & Kashmir in the north, Himachal Pradesh in the northeast, Haryana in the south and southeast, and Rajasthan in the southwest.

The confluence of five rivers makes Punjab’s agricultural land rich and productive. Approximately 82 per cent of the state’s land is under cultivation compared with the national average of 40 per cent.

The state’s GSDP (in Rs) increased at a Compound Annual Growth Rate of 9.97 per cent between 2011-12 and 2018-19A to Rs 5.18 trillion (US$ 71.84 billion).

The state provides investment opportunities in sectors such as textiles, agro-based industries, IT & ITeS, automotive and auto components, sports goods and light engineering goods.

State is the source of 95 per cent of India’s Woollen Knitwear production, 85 per cent of India’s sewing machine production and 75 per cent of India’s sports goods production.

Punjab is also known as the ‘Breadbasket of India’ and led to first Green Revolution in the country. By 2025, it is expected that the state will be among the leading producers of non-food grains as well as exporter of various agri-products. During 2017-18, gross area sown was estimated at 7.9 million hectares. Total food grain production during 2018-19 is stood at 30.44 million metric tonnes, as per state’s economic survey 2018-19. Horticulture production in the state reached 7,342.12 thousand metric tonnes in 2018-19, as per the 3rd advance estimates.

Punjab’s road, rail and air transport network, connectivity, construction of bridges and infrastructure facilities are rated among the best. As of November 2019, Punjab had total installed power generation capacity of 13,525.31 MW of which 8,070.88 MW was contributed by thermal power, 3,809.12 MW by hydropower, 1,448.50 MW by renewable power and 196.81 MW by nuclear power.

According to the Department of Industrial Policy & Promotion (DIPP), cumulative FDI inflows to Punjab1 between April 2000-March 2019 amounted to US$ 2.09 billion and in Q1FY20 US$ 60 million. During 2019 (up to October 2019), Punjab Government received 49 IEMs with proposed investments of Rs 1,745 crore (US$ 249.68 million).

Punjab has easiest procedures to set up a business, according to a study by the World Bank and KPMG. Punjab had set up a Bureau of Investment Promotion (BIP) in December 2013 for one-stop clearance of investment proposals. BIP has powers to give approvals related to pollution control, excise and taxation, labour issues, factory licences, boiler registrations, town and country planning, land and power-related issues.

Punjab has emerged as a key hub for textile-based industries including yarn, readymade garments and hosiery. With the development of apparel parks, favourable textile policy and other incentives for the creation of textile infrastructure, the state offers opportunities for investment.

Total merchandise exports from Punjab were US$ 6.03 billion in FY19 and reached US$ 2.69 billion during April-September 2019.

Key Sectors:

  • At current prices, the primary sector contributed 29.08 per cent of the state’s Gross Value Added in 2018-19A. Food processing is considered to be a focus area in the state and the government has made various efforts in aiding deserving investments for the food processing industry. Basmati rice is the most exported commodity from the state. Its exports reached US$ 597.22 million in FY19 and US$ 304.28 million between Apr-Sept 2019.
  • Three mega food parks and one food park in Punjab have been notified by the Ministry of Food Processing Industries out of which one mega food park is operational and second is partially operational as of April 2019.
  • Punjab’s IT policy and the incentives offered to the IT industry are aimed at promoting Punjab as an attractive destination for the industry. Mohali has been developed as an IT and ITeS hub in the state.
  • Punjab is among the largest producers of cotton and blended yarn as well as mill-made fabrics in India. Ludhiana is often referred to as the ‘Manchester of India. In FY20 (till September 2019), Punjab exported cotton yarn worth US$ 227.27 million and ready-made garments (manmade fibres) worth US$ 101 million.


1 Includes Chandigarh, Punjab, Himachal Pradesh and Haryana, A - Advance Estimate

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